AUSSIE BONDS: Little Changed, Fed Budget Deficit Lower Than Forecast
ACGBs (YM flat & XM +0.5) are little changed on a data light session.
- (Bloomberg) “Australia’s official data out Friday showed the federal government’s budget deficit came in at A$11.6b over the first two months of the 2025-26 financial year, some 21% narrower than forecast. That adds to the air of prudence when compared with data at the start of this week showing the measure at only 0.4% of GDP in the fiscal year ended June 2025, rather than the 1% forecast. That’s a stark contrast to the US, which is running a 6.3% shortfall.”
- Cash US tsys are ~1bp cheaper, with a slight steepening bias, in today’s Asia-Pac session after modest gains.
- Cash ACGBs are unchanged with the AU-US 10-year yield differential at +24bps.
- The latest ACGB May-32 supply achieved a weighted average yield that printed 0.58bp through prevailing mids (per Yieldbroker). Moreover, the cover ratio increased significantly, falling to 3.3850x from 2.9267x.
- The bills strip is -1 to -2 across contracts.
- RBA-dated OIS pricing is little changed across meetings today. A 25bp rate cut in November is given a 41% probability, with a cumulative 14bps of easing priced by year-end.
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